The price has gone up and down, but what about the value? Is now a good time to buy? (Price is what you pay, value is what you get.) In Dutch I would say: "De bedrijfseconomische waarde is niet wat de gek ervoor geeft." Update May 28th 2017: Sales are up, still making a loss, book value has decreased. Stock price dipped to 10 and is back above 20 Euros.

Here is an analysis of Altice using the methodology of Benjamin Graham, the father of value investing as explained by John Reese and Jack Forehand in The Guru Investor.

SECTOR:[FAIL]ALTICEis in the
Technology sector, which is one sector that this methodology avoids. Technology
and financial stocks were considered too risky to invest in when this
methodology was published. At that time they were not the driving force of the
market as they are today. Although this methodology would avoidALTICE, we will provide
the rest of the analysis, as we feel times have changed.

SALES:[PASS]The investor must select companies of
"adequate size". This includes companies with annual sales greater
than $340 million.ALTICE's sales
of14 billion, based on the trailing 9 month sales, passes this
test.

CURRENT
RATIO:[FAIL]The current ratio must be greater than or equal to
2. Companies that meet this criterion are typically financially secure and
defensive. The current assets are 6,5 billion and current liabilities are 10
billion.ALTICE's current
ratio of0.65fails the test.

LONG-TERM
DEBT IN RELATION TO NET CURRENT ASSETS:[FAIL]For industrial companies, long-term debt must not
exceed net current assets (current assets minus current liabilities). Companies
that meet this criterion display one of the attributes of a financially secure
organization. The long-term debt forALTICEis32
billion, while the net current assets areminus 3,50 billion.ALTICEfails this test.

LONG-TERM
EPS GROWTH:[FAIL]Companies must increase their EPS by at least 30%
over a ten-year period and EPS must not have been negative for any year within
the last 5 years. Companies with this type of growth tend to be financially
secure and have proven themselves over time.ALTICE made a loss in 2014.

P/E RATIO:[FAIL]The Price/Earnings (P/E) ratio, based on the
greater of the current PE or the PE using average earnings over the last 3
fiscal years, must be "moderate", which this methodology states is
not greater than 15. Stocks with moderate P/Es are more defensive by nature.ALTICE's P/E
can’t be calculated because it made losses(using
the 3 year PE) fails this test.

(Note: IF
ALTICE’s Earnings per share were 0,5 than the price shouldn’t be higher than
0,5*15 = 7,5. )

PRICE/BOOK
RATIO:[FAIL]The Price/Book ratio must also be reasonable. That
is, the Price/Book multiplied by P/E cannot be greater than 22. (Or
Price/Book shouldn’t be higher than 1,5). ALTICE's Book
value is 2 billion equity divided by 1 billion shares is 2 Euros per share and
the Price/Book ratio is13/2
= 6,5.ALTICE fails
the Price/Book test.

Conclusion: ALTICE is very difficult to evaluate. The company’s financials have changed drastically in the past year due to deal making. Assets have increased dramatically and could result in fantastic earnings for shareholders going forward, but it is not a company for the Defensive Investor. ALTICE might be cheap at a price of under 10 Euros per share, but belongs in what CharlieMunger calls the “too hard pile”.See www.MoneyMakingMachines.nl for Graham Defensive InvestingComments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com